Inflation?

The Institute of Supply Management–Houston is reporting an eighteenth month of consecutive economic growth for the region. But inflation is starting to cause real headaches for local manufacturers. Andrew Schneider has the story.
red arrow pointing upwardsThe institute announced the Houston Purchasing Managers Index for March at 59.9, nearly a full point above the 2010 high set last May. The PMI indicates likely shifts in production three to four months in advance, with readings over 50 signaling production gains.

As business survey chairman Mike Valant notes, though, the biggest contributor to the March numbers is hardly a cause for celebration.

“Fifty-five percent of the participants were showing price increases, which is definite inflation.”

Rising oil prices account for some of the price hikes. Another major factor: earthquake-related disruptions to the supply of Japanese electronics components.

“Several of the areas that lost their factories and cannot produce parts — I’ve had a couple that are down completely, a couple that are 50%, hopefully to get up to 80%, and then they turn around and floating power outages, government shutdowns and transportation [shutdowns] are keeping their workers away.”

On the plus side, the survey shows local employment is continuing to improve, with 93% of respondents reporting employment levels as either the same or increasing.
Bio photo of Andrew Schneider

Andrew Schneider

Business Reporter

Andrew Schneider joined KUHF in January 2011, after more than a decade as a print reporter for The Kiplinger Letter...